(Reuters) - Gold edged higher on Tuesday as equities faltered on mounting expectations that the U.S. Federal Reserve will likely go ahead with an interest rate increase this month.

Fed Vice Chairman Stanley Fischer said on Saturday that U.S. inflation will likely rebound as pressure from the dollar fades, allowing the U.S. central bank to raise interest rates gradually.

Fischer's comment sent Wall Street lower overnight and U.S. stock futures stretched losses on Tuesday, with Asian shares also falling, led by China. The dollar similarly weakened as risk aversion favored the euro and yen.

"We are seeing some general risk-off moves in the Asian timezone and some buying of gold would be consistent with that," Ric Spooner, chief market analyst at CMC Markets in Sydney.

Spot gold was up 0.5 percent at $1,139.60 an ounce by 0153 GMT, after an uneventful session on Monday.

Bullion ended August 3.5 percent higher as worries over China's slowing economy sparked safe-haven bids, although the metal has since come off a seven-week top.

Growing indications that the Fed could lift rates on its next policy meeting on Sept. 16-17 could limit gold's upside potential.

Spooner said only another "fear-based" deep rout in global equities like that seen on Aug. 24 following a slump in Chinese stocks would "dissuade the Fed from easing."

"And I think if we did see a very strong number in the nonfarm payrolls this week, it would certainly give them an opportunity ... to make their move in September," he said.

But Spooner said there is a chance that the U.S. rate hike - which would be the first since 2006 - could induce profit-taking in the dollar and potentially buoy gold.

U.S. gold for December delivery rose 0.6 percent to $1,139.20 an ounce.

MKS Group trader James Gardiner said he sees resistance for bullion at $1,145 and then at $1,150 with immediate support around $1,125.